Oracle chief Mark Hurd warns companies on market expectations

Companies will fail to meet the expectations of a “dynamic” market unless they transition to a lower cost, more responsive and higher security cloud computing environment, said Mark Hurd, joint chief executive (with Safra Catz) of technology company Oracle.

Speaking on Monday during his morning keynote on the second day of the company’s annual OpenWorld conference in San Francisco, Mr Hurd said there were many signs that companies were not going to be ready for a new generation of customers who have grown up with the internet and want real-time information, and fast, integrated service.

By 2020, half of the workforce will be the internet-adept millennial generation, he said.

Mr Hurd argued there was a correlation between double-digit revenue declines at many big companies, flat GDP growth, and stagnant corporate information technology budgets. IT spend is down 5 per cent, according to statistics he showed to the audience of several thousand. This indicates enterprises are making little investment in innovation, he said.

“Applications are old,” noted Mr Hurd and companies are spending 80 per cent of IT budgets simply on maintenance. Yet some 95 per cent of company networks have been breached – indicating a poor investment in security, he added.

Meanwhile, the markets were looking for short-term success, with chief executives feeling the pressure.

“There is very little room for error. If you don’t deliver, someone is waiting to take your place.”

The answer was for companies to start to move operations to a cloud environment, he said.

He claimed that efficiency and cost gains would help companies improve their bottom line and meet the expectations of millennial customers and employees.

“That’s why this cloud thing is such a big deal.”

“It is about a lower cost structure. It is about a less complex environment. It is about a more secure reliable environment with rapid innovation,” he said. “It is macroeconomics, the ability to get from here to there at a lower cost and get to faster innovation now.”

Cloud environment

Oracle would “lead a 10-year transition to the cloud”, he said, noting that nearly all its applications have been rewritten now for a cloud environment.

Mr Hurd also made a number of predictions for the year 2025. He said that by 2025, 80 per cent of all production applications would be in the cloud. He predicted that by the same year, just two providers of suites of cloud applications would have 80 per cent of the market.

“I volunteer us to be one,” he said to laughter.

He also said that 100 per cent of enterprise data would be stored in the cloud by that year. Already, more data is in cloud storage than in traditional, on site storage, he said. In addition, 100 per cent of companies’ development testing of new applications and services would be in the cloud.

Finally, he said that by 2025, the clouds would be the most secure IT environments.

Oracle’s cloud platform runs full encryption and IP security by default, and security patches for applications are implemented immediately across its entire cloud infrastructure, he said.

By contrast, Mr Hurd said 74 per cent of organisations take at least three months to apply a patch, and that 99 per cent of security breaches in 2014 had had a patch available for over a year to address the vulnerability that was exploited.

Mr Hurd said that Oracle was also continuing to invest in developing its products for on-premises computing environments alongside its cloud portfolio, as it recognised many companies would run IT in both environments for many years to come.